Abstract
In this research, we examine the dynamic capability of resource allocation to invest in operational capabilities. Using a computer simulation, we model a process of firms competing in factor markets for opportunities to invest in existing capabilities and acquire new ones. Based on the simulation results, we derive a set of propositions about the conditions under which there are and are not performance benefits from possessing a superior ability to search for new capabilities. Because the definition of what constitutes a new capability is based on a firm's preexisting capabilities, we also incorporate differences in initial endowments into the analysis. We find that endowment and search ability both matter, and that in many circumstances, the effects of possessing a superior endowment dominate the effects of superior search ability.
| Original language | English (US) |
|---|---|
| Pages (from-to) | 99-117 |
| Number of pages | 19 |
| Journal | Organization Science |
| Volume | 22 |
| Issue number | 1 |
| DOIs | |
| State | Published - Jan 1 2011 |
| Externally published | Yes |
Keywords
- Agent-based model
- Computer simulation
- Dynamic capabilities
- Factor market
- Investment
- Resource allocation
ASJC Scopus subject areas
- Strategy and Management
- Organizational Behavior and Human Resource Management
- Management of Technology and Innovation